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Memphis Tennessee Bankruptcy Blog

Understanding lien stripping

At the law offices of Jimmy E. McElroy & Associates in Tennessee, we understand and empathize with the way our clients feel when they face overwhelming debt and bankruptcy is their only way out. Sometimes Chapter 7 better fits their needs, but if you want to save your home from foreclosure and have a second mortgage on it, Chapter 13 may be your best option.

As explained by SFGate.com, Chapter 13 may allow you to strip the lien your second mortgage lender holds on your home. Keep in mind that whereas Chapter 7 discharges virtually all of your consumer and credit card debt, Chapter 13 affords you the opportunity to reorganize debts and pay most of them off over a long period of time, usually three or five years. You do this by devising a court-approved payment plan and living up to its financial obligations during your bankruptcy period.

Is the person you are marrying about to file bankruptcy?

Your fiancé, Jim, is a wonderful human being: even-tempered, thoughtful and kind to children and animals. He is a hard worker, too, but there is one concern: Jim is deeply in debt and about to declare bankruptcy.

You have a fine career and a sterling credit rating. You cannot help wondering how Chapter 7 is going to affect your marriage and your own financial future.

Will you lose your house if you file for bankruptcy?

If you are like many Tennessee residents, you may be trying to figure out how to start digging yourself out from under overwhelming debt, but you may not have a strong understanding of your options. You may know that bankruptcy is one method many people use to get a fresh financial start, but you may have questions about the bankruptcy process, and whether you will lose your most valued possessions if you file.

Per the Washington Post, there is a common misconception out there that, by filing for bankruptcy, you can automatically kiss your home, your car and your other prized possessions goodbye. This is not, however, always the case, and ultimately, it will depend on several factors, among them the type of bankruptcy filing you follow.

Dispelling common bankruptcy myths

If you, like many residents of Tennessee, are finding it increasingly difficult to stay on top of your finances, you may be seeking solutions that could potentially help you get your life back on track. Bankruptcy, for example, is one method many people consider when they seek a fresh financial start, but there is a lot of misinformation out there about it that can prevent some people from taking the first step. At McElroy & Associates, we recognize that there is a lot of common misconceptions out there about the bankruptcy process, and we have helped many clients separate fact from fiction and find solutions that meet their needs.

Per Nerdwallet, one of the most common misconceptions about filing for bankruptcy is that, in doing so, you must acknowledge some sort of personal failure. Bankruptcies have become increasingly common, however, for two primary reasons. First, the majority of people who file for it are struggling with overwhelming medical debt. Second, wages are not rising alongside medical deductibles, leaving many hard-working Americans with limited options.

How long does Chapter 13 give you to pay debts?

You probably have several options in Tennessee for debt relief, but few have the potential to be as generous as Chapter 13 bankruptcy. Part of the advantage is the relatively long timeframe in which you would be able to address your financial liabilities.

Chapter 13 is different from chapter 7, the other common form of personal bankruptcy, in that the former allows for a scheduled repayment of debt over a court-ordered period of time. Chapter 7, on the other hand, involves a liquidation of assets and often repossession of collateral to address money owed. Both have the potential to stall collections while your motion awaits resolution. This final point is significant in the context of this discussion, as it effectively adds to the amount of time you could use to gather the resources necessary to pay your debts.

Does bankruptcy really stop bill collectors?

If you are not familiar with bankruptcy, there are probably many small frustrations associated with the process that you do not know about. For example, you may not realize the extent to which Tennessee courts deliberate on their decisions, slowing down the relief of debts. 

However, it is not usually the lack of speed that frustrates most people who declare bankruptcy. This is because, in some situations, this arduous process represents a welcome change in a debtor's daily life: silence from persistent collection agencies.

5 mistakes to avoid when you file for bankruptcy

When you are trying to tunnel through a mountain of debt, you may have decided that bankruptcy is your best way forward.

You are relieved to have made this decision, but also apprehensive. Bankruptcy is a big step and a whole new experience. You want the process to go smoothly, so here are five potential missteps to avoid:

What is the bankruptcy means test?

If you, like many others across Tennessee, are facing overwhelming debt, you may be weighing your options in an effort to figure out what might help you get back on your feet. In some cases, you may find that filing for bankruptcy may help you rebuild your finances and regain control over your life in the shortest amount of time, but you may not know much about the process, or what it entails. Nowadays, the majority of personal bankruptcies involve Chapter 7 filings, but only those who pass what is known as the bankruptcy means test can file through this method.

Per Nerdwallet, the bankruptcy means test helps you determine whether you can file for bankruptcy through a Chapter 7, which is for lower-income earners, or if you have too much “disposable income” at hand and should instead consider a Chapter 13 filing. In a Chapter 13 bankruptcy, you must typically pay back at least some part of your outstanding debts, which differs from the typical process followed in a Chapter 7 bankruptcy.

Chapter 7 versus Chapter 13: Which is best for you?

If you live in Tennessee and are thinking about filing bankruptcy as a last resort to relieve you of your overwhelming debt, you likely wonder whether Chapter 7 or Chapter 13 is your best choice. As FindLaw explains, both types of bankruptcy have their respective advantages and disadvantages, and which is best for you depends on the nature of your debt and how you wish to handle it.

While approximately 71 percent of bankruptcy filers choose Chapter 7, they do so mostly because Chapter 7 is easier and takes less time.

Will I lose everything if I file for bankruptcy?

If you are scared about losing everything you own to a Tennessee bankruptcy, take a deep breath and prepare for some good news. Filing and eventually being approved for this type of debt relief would not cause you to lose your belongings, if you were to go about the process correctly.

The biggest myth you might have heard surrounds Chapter 7 bankruptcy. Even after an in-depth discussion — and perhaps even as a result of the complex and emotionally charged nature of those conversations — you might still have fears regarding your ability to retain your property after this type of liquidation.

*We are a debt relief agency.
We help people file for bankruptcy relief under the Bankruptcy Code.